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Exchange rates blow to overseas work

Concern Worldwide warns that recent fluctuations in international exchange rates are going to have a significant and damaging effect on its overseas work in 2009.

“We are now operating in a hugely challenging period for aid agencies,” said Concern’s Overseas Director, Paul O’Brien. “We are already experiencing the damaging effects of the recession on our fundraising and as a consequence, on our ability to deliver on our overseas aid...Now we have this latest blow, with exchange rates working against us, resulting in up to a 20% loss in the value of the 2009 budgets we have drawn up for several countries.”

“Only 10% of our operational areas are not affected by these exchange rate fluctuations,” explained O’Brien. “Exchange rate losses of 10% are just about “absorbable” over a period of time, but any percentage higher than that really starts to hit our programmes overseas. In a lot of these countries, the local currency is pegged to the dollar or the dollar is actually used as currency…”

Rising food prices

“We’ve had substantial increases in food prices over the past two years,” explained Paul. “This was followed by recent spikes in fuel prices and over the past few months, we’ve had the international financial crisis which is affecting us now, but will trickle down and then affect the economies of developing countries. Concern works with the poorest of the poor within developing countries.The bottom line is that all of this will impact on them.”

Forecasting exchange rates

Concern uses the Economist Intelligence Unit for forecasting exchange rates and its budgets are drawn up on this basis. Given the uncertainty in financial markets at present, it has become extraordinarily difficult for agencies like Concern to plan actual spending for 2009 and beyond.

Concern’s initial estimates could drift off-target as a result of currency instability and general international economic uncertainty.

“We may have to scale back programmes. Tough decisions will have to be made,” declared O’Brien.

Continuing Irish support

“Irish people should be proud of our country’s contribution to international aid and development… We hope that they will continue to help us to help the poorest of the poor in this world by donating to Concern or buying Concern Christmas gifts.”